What Is the Current Value of a Share of McDonalds

question 62

Multiple Choice

What is the current value of a share of McDonalds if its current dividend is $1.50 and dividends are expected to grow at an annual rate of 20 percent for the next 5 years? Assume the investor has a required rate of return of 15 percent and expects to sell the security in 5 years for $72.

• A) $44.31
• B) $35.78
• C) $39.63
• D) $72.00

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Definitions:

Geographic Market

The defined area within which a company competes for customers, including factors of geography, demography, and economy.

Antitrust Law

Legislation aimed at preventing monopolies and promoting competition to protect consumers from unfair business practices.

Monopoly Power

is the ability of a single company or entity to control a significant portion of the market for a particular product or service, limiting competition.

Antitrust Laws

Regulations designed to protect trade and commerce from unfair practices, such as monopolies and cartels.